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The Effect of the End of Hiring Incentives on Job and Employment Security

Author

Listed:
  • Ardito, Chiara

    (University of Turin)

  • Berton, Fabio

    (European Commission Joint Research Centre (JRC))

  • Pacelli, Lia

    (University of Turin)

  • Zanatta, Marina

    (University of Torino)

Abstract

We analyse the long-term impact of hiring subsidies on both job and employment security. The subsidy that we examine was introduced in Italy through the 2015 Budget Law, with the goal of promoting open-ended contracts. We employ a non-linear difference-in-differences (NL-DiD) approach within a duration framework, using high-frequency, population-wide linked employer-employee administrative data from a large Italian region. Causal results on job security indicate that the subsidy’s protective effect is short-lived. Excess separations from subsidised jobs peak in the exact same month in which the monetary incentive expires. No long-term protective effect of the subsidy is observed regarding employment security. These results hold across a wide range of worker and firm characteristics, showing surprisingly little heterogeneity. One notable exception concerns firm size. Furthermore, the expiration of subsidies disproportionately affects workers with low human capital. Our findings suggest that hiring subsidies are not effective in promoting either job or employment security for beneficiaries and that this raises questions about the efficacy of this common and costly policy, particularly when offered unconditionally.

Suggested Citation

  • Ardito, Chiara & Berton, Fabio & Pacelli, Lia & Zanatta, Marina, 2025. "The Effect of the End of Hiring Incentives on Job and Employment Security," IZA Discussion Papers 18024, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18024
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    References listed on IDEAS

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    1. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    2. Huber, Martin & Lechner, Michael & Wunsch, Conny, 2013. "The performance of estimators based on the propensity score," Journal of Econometrics, Elsevier, vol. 175(1), pages 1-21.
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    Cited by:

    1. Michele Cantarella & Maria Cristina Maurizio & Francesco Serti, 2025. "The temporary impact of permanent hiring incentives: Evidence from Italy," Papers 2509.10193, arXiv.org.

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    More about this item

    Keywords

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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